Microfinance and the Empowerment of Women - A Review of the Key Issues

This paper posits that there are four basic views on the link between microfinance and women's empowerment:

• The view stressing the positive evidence which is optimistic about the possibility of sustainable microfinance programmes world-wide empowering women;
• The view recognising the limitations to empowerment, but explains those with poor programme design;
• The view recognising the limitations of microfinance for promoting empowerment, but sees it as important within a strategy to alleviate poverty;
• The view that sees microfinance programmes as a waste of resources.

This paper aims to clarify these issues within the context of the debate about gender mainstreaming. Fifteen case studies form the main basis of the arguments and the paper concludes that:

• Women's empowerment needs to be an integral part of policies;
• Empowerment cannot be assumed to be an automatic outcome of microfinance programmes, whether designed for financial sustainability or poverty targeting;
• More research and innovation on conditions of microfinance delivery is needed;
• Cost-effective ways of integrating microfinance with other empowerment interventions, including group development and complementary services are still lacking;
• Unless empowerment is an integral part of the planning process, the rapid expansion of microfinance is unlikely to make more than a limited contribution to empowerment.